Image courtesy of Léonard Gianadda, a Swiss photograher who visited Moscow in 1957.
This is probably one of the lengthiest and most controversial topics to attempt, yet it is very important for our blog to answer — or at least to raise this question. If you have been following us for a little while, you would know that by mid 1980s the atmosphere in Russia was tense. The miracle of doing well in the WWII had been wearing out. The total deficit of everything and the black markets did not contribute to keeping the morale up. The Chernobyl disaster as well as war action in Afghanistan had drained the country both financially and psychologically. The public resentment was growing: the common joke was that you could find truth anywhere except in Pravda and the news anywhere except in Izvestia. (both are the Russian newspapers, the first one literally meaning truth and the latter one – news). For years the govermnent had been running in the red but it did not catch up with them till late 1980s – and it was too little too late for a change.
Guns or butter?
I would like to start this analysis by going back to the years of WWII, when the Soviet Union had one-third of the combined industrial potential of Nazi Germany, its allies and the Nazi-occupied countries, and, moreover, lost half its industry in the early months of the war. Nevertheless, in sum it produced more weapons of a better quality than Germany did, and won the great Victory. This, however unbelievably it may sound, could have been the prime reason for the decline of the USSR. They say the Soviet leaders were blinded by the miracle success – and had lost the sense of direction by entering the arms race.
Theoretically speaking, Karl Marx was the best to put it simply: in Capital, he labells war as the ultimate example of unproductive economic activity and called it “the direct equivalent of a nation throwing a part of its capital into the water”.
He also separates the productive labor of agricultural, textile, mining, industrial, and household workers from the unproductive labor of the ideological classes, such as government officials, priests, lawyers, soldiers, etc — all who have no occupation but to consume the labor of others in the form of rent, interests, etc. Thus the arms race – the country’s spendings on the military advancement and developments – has a counter productive nature and causes economic stagnation.
This in turn affected the scientific distribution: as all the best scientists, engineers, materials and machinery were, by strict orders from the highest command, delegated to the military sector.
No wonder it caused the technological lag behind the rest of the world. Ccomputers, hand calculators, audio and TV recorders, and machine tools made in the USSR could never compete with what was designed in the West. Despite the fact that every Soviet would rather own something overseas-made, the deficit of such prime goods was enormous. It also affected the services, like even though the health care was free and universal, often it struggled to deliver services due to deficits in medicine supplies.
Lloyd Dumas in his 1986 book, The Overburdened Economy, makes a convincing case hat the U.S. as well as the USSR has been economically devastated by the counter-productive effects of military spending. However, it wasn’t American economy which failed after the Cold War – it was the Russian one which fell first. Partly it was because the U.S. was integrated with the global capitalist market and flooded with imported goods, so their devastation did not show up directly in shortage of consumer and producer goods.
Dumas also notes that despite the fact that the US spent almost 7% of their GDP on the arms race, they did not come out as financially exhausted as the USSR:
The Soviet Union, in contrast, never received imperialist profits to offset the counter-productive cost of military production. Throughout the post-war period, Soviet trade with socialist partners has been structured to benefit the other socialist countries. Their purpose was reasonable: to build up the economies of the other socialist countries and create a thriving world socialist economic system as an alternative to that of the capitalists. This was most marked in Soviet trade with Cuba and Vietnam, but it could be seen as well in trade with Eastern Europe which received Soviet oil at below-market prices. The CIA was well aware of this drain on the Soviet economy, and argued that it would eventually drive them bankrupt.
And so it did
On top of that was corruption, bad policies and poor planning, the rigid, isolated system of Soviet power with restricted movement and incredible levels of bureaucracy, as well as widespread resentment towards such a state — a side effect of Gorbachev’s glasnost.
But maybe the Soviet Union had no choice but to engage into the arms race — right up to their eyeballs. Then the massive commitment of Soviet technology, production capital, and administrative-command methods were unavoidable in order to confront the invasions — after the Revolution, the invasion by Hitler’s armies, and the Cold War threats of the U.S. and its allies. In other words, it is said that war communism was forced upon them.